Good evening, and thank you for joining us. I'm with Stefano Beretta, our CFO, presenting the Full Year 2024 results and the guidance for the first quarter of this year. As usual, a Q&A session will follow at the end of the presentation. 2024 confirmed Technoprobe as leader in the testing of logic chips for artificial intelligence. Investments we made in the last couple of years, together with the solid know-how of Technoprobe in the MEMS technology, have been the drivers to achieve this leadership. Looking at the revenues split, 35% of revenues refers to artificial intelligence, approximately + 15% compared to 2023. A better-than-expected result, driven by surging volumes of chips for data centers, feasible thanks to the increase in manufacturing capacity compared to 2023. Artificial intelligence will remain the main growth driver also for 2025. Demand is seen as both realistic and extremely strong.
Also, bear in mind that artificial intelligence, as well as the most technologically advanced chips, requires high performance, low power consumption, and quick data processing features supported by advanced packaging architectures. These architectures, which use sophisticated technology and aggregate components to create a single electronic device, require advanced testing solutions based on MEMS technologies. That said, we are assuming a progressive and steady increase in demand for advanced logic testing solutions. Let's move to the consumer segment, which for us refers mainly to PC and mobile. It is stable at approximately 50% of our revenues. 2024 has been a year of stabilization, and the segment is expected to post a slight growth in 2025. In fact, we think that they will still suffer from a slower adoption of AI at the edge, which is confirmed to be the real catalyst.
The exposure of automotive and industrial decreased in 2024 from 20% to 15%. The industrial segment is expected to remain sluggish in 2025 due to the stocking expected to continue at least in the first half of this year. The automotive segment will show the same areas of weakness, as well as OEM inventory containment measures and slow electrical vehicle sales, even if the long-term trend of electrification has not changed. In this scenario, our expectations for the current year are positive. We are working to secure the leading position of Technoprobe in artificial intelligence, to consolidate our distinctive knowledge in the advanced testing space, both at front end and back end, and continue to work hard on the ambitious project to enter the high-bandwidth memory market segment.
As you know, we will dig more into our competitive positioning in the testing space, focusing on the growth trajectories of our company in a couple of weeks during the Capital Markets Day that will be held on April 14. Now, I turn over to Stefano Beretta, who will give you more color on our 2024 results.
Thank you, Stefano. Good afternoon, everyone. As we have seen in our press release just published, revenues in the fourth quarter were EUR 156.3 million, beating the guidance and registering an increase of 53.3% compared to the same quarter of prior year, with a sequential increase of 7.2% compared to Q3 2024. Gross profit increased 48.7% compared to the same period of 2023, up to EUR 63.3 million, representing a 40.5% margin at the lower end of our guidance, inclusive of approximately EUR 6 million of fixed asset impairment and EUR 1.5 million of severance and other provisions related to the U.S. reorganization announced during the quarter. Excluding these, the gross profit would have been equal to 45.3%, beating the guidance consistently with the revenue. Also, the EBITDA closed at the higher point of the guidance.
It increased 85.8% compared to the fourth quarter of 2023, with a margin of 26.4%. Without the U.S. reorganization provisions, it would have been equal to 27.3%. Moving to the year-to-date figures, total revenue was EUR 543.2 million, with a year-on-year increase close to 33%. Gross profit was EUR 223.4 million, 12.1% up compared to the same period of 2023, and representing a margin of 41.1% or 42.5% without the reorganization provisions. The EBITDA for the year closed at EUR 136.5 million, up 11.2% compared to the same period of 2023, and representing a margin of 25.1%, 25.4% without the reorganization provision. For the completeness of information and comparison purposes, it's worth remembering that all the above figures include a new perimeter of consolidation, inclusive of the contribution of Harbor Electronics, 12 months in 2024 compared to a little less than 5 months in 2023.
DIS Tech, 7 months in 2024 compared to 0 in 2023. If we can move the next page, so thank you. You can see the simple annual trend by quarter of our main KPIs, so revenue, gross profit, gross margin, and EBITDA. The slow but steady growth in all our KPIs was really consistent with our prudent view of the market and confirms the solidity of our plan. Despite the uncertainties that characterized 2024, particularly in the consumer automotive segments, like Stefano Felici said a few minutes ago. The organic revenue, just for your information, in 2024 compared to 2023 was, as expected, mid-double digit at 14%. On this page, you can see the usual summary comparison between the financials at the end of 2023 and 2024.
Just to comment that further, revenue year-on-year increase of 32.7% was driven by a gradual recovery of the consumer segment and by volumes related to the artificial intelligence. For the other half of the contribution for Harbor and DIS Tech, all of them partially mitigated by the weakness in automotive and industrial. Revenues expressed in constant currency, so using the same average FX rate of 2023, would have been approximately EUR 3.2 million higher than reported revenues, meaning less than 1% unfavorable impact. In fact, in 12 months, average USD/EUR rate for fiscal year 2024 was pretty aligned with prior year, so 1.082 compared to 1.081 of 2023.
On a gross profit level, the decrease in the margin from 48.7% to 41.1% was the result of the expected dilution from the mentioned acquisition, together with a relevant increase of depreciation following the investments in fixed assets made in the last 12 months, and also due to the growing complexity of our products and to the related and temporary lower performance registered in the second and third quarters of the year now resolved. Moreover, as mentioned during Q4, a significant reorganization process has affected the U.S. structure, bringing into the accounts provisions for approximately EUR 13.5 million, of which 7.5% impacting the gross profit, 6% of them related to fixed assets, and 1.5% related to severance, inventory, and other minor provisions.
Finally, it's worth remembering that during the year, a prudent inventory reserve for approximately EUR 13 million was recorded to reflect both a slower inventory rotation, given the already mentioned reduction of revenues, together with a potentially faster obsolescence of owned and semi-finished products. Gross profit at constant currency has been approximately EUR 1.5 million higher by using the 12-month 2023 average rate. Consistently, the EBITDA reflects the same trend, showing a decrease in the margin from 30% to 25%, including a negative forex impact for approximately EUR 1.4 million. We would like to again note that EBITDA was also impacted by a significant amount of R&D cost, approximately EUR 63 million, EUR 6 million more compared to the amount recorded in the same period of 2023 and representing approximately 12% of our revenues.
C onfirming once again the mindset and the commitment of our leadership to continuously develop new products and solutions. Finally, a few words for the net financial position that is up for almost EUR 395 million in the 12-month period, mainly due to EUR 124 million generated through the operating activities, together with EUR 385 million generated through the capital increase following the Teradyne acquisition of 10% stake, both of them partially offset by EUR 94 million absorbed by the investment of the period, EUR 82 million absorbed by the acquisition of DIS Tech, and EUR 35 million absorbed by the share buyback program. We wanted to include also this page in a very synthetic focus on investments, which has grown to the threshold of EUR 100 million compared to EUR 73 million in the previous year, representing now a portion equal to 80% of the revenues.
As just mentioned in the previous comments, most of the investments were dedicated to the completion of the second MLO and MLC factory in Taiwan, which will be operating starting from the second quarter of 2025, as well as to the increase in production capacity and automation in manufacturing processes of Technoprobe Italy. Now, I hand over to Stefano Felici for the next comment.
Yes, as you know, we signed partnerships with Teradyne and Advantest, the two main tester manufacturers. Our aim is to build an open ecosystem to share knowledge on the entire testing process to facilitate the technology evolution. Now, I will hand back again to Stefano Beretta for the first quarter 2025 guidance.
Thank you, Stefano. We project an overall stabilization in our reference market for the first part of the year with a slight sequential increase in revenue, together with a progressive recovery of profitability. That said, the first quarter of the year is expected to show the following: revenues to be about EUR 157 million, ± 3%. Gross margin in the range of 44.6%, ± 2%. EBITDA margin in the range of 30.2%, ± 2%. Thanks, everyone, for your attention. Now, we can move to the Q&A session.
Thank you to the management team. We now have an opportunity for questions. As a reminder, if you would like to ask a question, please use the raise hand function on your screen, or for those signing in, it is star nine on your keypad. Once your name is announced, please remember to unmute your line and state your company name before asking your question. Thank you. The first question we have today comes from Giovanni Selvetti. Please, Giovanni, the floor to you. Giovanni, I can see that you are on mute.
Yeah, can you hear me now?
Yes, we can hear you. Thank you.
Hello, everyone, and thanks for taking my question. I have a very quick one. I was wondering if you can give a sense of what CapEx is going to look like in 2025. I can see, and thanks for the split of the EUR 100 million roughly invested in 2024. I'm just asking that to have a sense of what the D&A weight is going to be, let's just say, going forward, because I could see that in 2024 was higher than actually more than expected. The second question is more about the cash, which is, of course, now already a lot, and it's increasing at EUR 650 roughly million.
I was wondering if you can give us an idea of how the cash is going to deploy if you're still intending to buy back or if you are planning to, let's just say, invest this cash or if you think about this, let's just say, good portion of financial income below the EBIT to be in a way stable. Maybe if you can give a bit more color on the gains on FX below the EBIT line? That's it.
Thank you, Giovanni. Moving back to the first question about CapEx in 2025, it will be in the range of EUR 50 million. We expect to be back to the usual level of investments after the big investment we did in the last couple of years. We do not expect to increase that much compared to what we did in 2023 and 2024. The increase of the depreciation and amortization for 2025 will be mostly due to the investment we already did in 2024. Back to the second question about cash. You are correct. We are in the region of EUR 670 million total cash of the company. Net financial position is EUR 10 million lower due to the right of use for leasing, but cash is pretty high. I agree with you.
The strategy now is to keep part of this revenue, of course, for our operations. Let's say 1/3 of them will be fully dedicated for operation. The other 1/3 of the cash will be dedicated to potential, let me say, M&A in case there will be the opportunity to make some good deal on the market, for which we are always keen for that. The remaining part is currently, let me say, invested in the money market, with zero risk or time deposit, zero risk as well, considering the good remuneration that are currently offered by our banks. For the moment, we have no other plans for that portion of the cash.
About your third question of gain on FX, the most part of this gain is considered unrealized gain because if you consider that in the last month of the year, the FX rate between U.S. dollar and euro dropped significantly compared to the average rate of the year. It was 1.08. It went down suddenly to 1.05. I mean stronger U.S. dollar. The most part of the transaction occurred at the year-end were converted at a better rate. The most part of that gave us a significant boost in terms of FX impact. This is the main explanation.
Okay. If I may, since you mentioned that a 1/3 will be in a way destined to potential M&A, is there anything that you're scouting now? Is there anything that you're evaluating at the moment, or it's just, let's just say, regular scouting, but nothing close, let's just say?
Yeah. Just to answer this question, first of all, I'd like to remind our D&A as a company was always to develop the key technologies in-house because that is the reason, and to vertically integrate these technologies in order to have a competitive advantage in the market and have a better cost, be more cost-effective. From time to time, also, we are looking outside, of course, because we can speed up sometimes the process, and we can integrate some technologies already available. We are always scouting for technologies. I would say as a regular scouting at this moment, we don't have any specific target, but we always see if there is something that is popping up that can be interesting to integrate in our portfolio.
Okay. Thank you very much.
Thank you for these questions. Our next question comes from Alberto Nigro. Please, Alberto, go ahead.
Good afternoon. Can you hear me?
Yes.
Okay. My first question is on the end markets because you are projecting a broadly stable consumer market in 2025, then a lower demand in the auto and industrial. What about AI data center? Can you give us a sense of which kind of growth should we expect after the strong 2024? On M&A contribution, what is the DIS and Harbor contribution in the fourth quarter and in the guidance for the first quarter? More in general, can you help us understanding what is driving margin up in the first quarter compared to the last quarter of 2024 despite the similar level of sales? One last question on tariff. I know it is still a bit an uncertain environment, but can you tell us how much of your products are shipped to the U.S., and more in general, your view on this topic? Thank you.
I will start to answer to the first question about the market. What I can tell you is, of course, you can see 2024 was a very strong year for AI. We see that 2025 is at least as much as strong as 2024, even higher at this moment. Slightly higher can be. As far as computing, it is flat, I would say. We see still weakness in the automotive and the industrial. What is driving more than any other segment is the AI. The procurement for AI is more complex. Also the price, the average price is higher. That is driving a very strong revenue for us.
About duties, this is a very sensitive point. Thanks for asking. This is something we are really, really careful about and monitoring every day the situation. For the moment, as you said, there are no particular concrete signals or triggers that can show some new duty, some custom duty on this semiconductor space. For the moment, we are still on the window. In case, for sure, we debate with our customers to understand which is the best solution to continue to serve them in the best way we can. For the moment, approximately a volume of 45%-50% of our market is in the U.S. with the U.S. customers.
Even if this market is not completely translated into shipping into the U.S., in fact, the shipment into the U.S. is reduced because most of these customers already prefer to get shipped in other countries, in Asia, basically. We can reduce the portion I mentioned in a range between 15%-20% in terms of volume shipped to the U.S. market.
Thank you. We now.
Sorry, I had another question on margin contribution from acquisitions.
Yes, please.
Sorry, my question was on the contribution of Harbor and DIS on sales and profitability in the last quarter of 2024 and what you expect in the first quarter of 2025? Thank you.
I can tell you in the last part of the year, both of them combined, Harbor and DIS, combined more or less for zero profitability, including all the reorganization costs that we have recorded already in 2024 that affected already EBITDA and gross profits. Both of them were pretty neutral in terms of contribution for 2024, diluting, of course, the other part of the business of the probe card. Moving forward, Harbor has been reorganized. The Santa Clara facility has been closed in Q1 2025. Also, the Microfabrica facility has been reduced a lot and merged into Technoprobe America. Both of them have continued to perform their operation until the end of March 2025 and will be completely shut down in April 2025 and going on. That is why in Q1, we do not expect a significant reduction in cost.
In fact, our EBITDA will increase. We expect an increase up to more than 30%. That is already a good and strong signal for our business, still including some dilution from Harbor performance. Moving forward, the contribution that will be measured between DIS and Technoprobe will not be that clear in terms of segregation because DIS now is in the process of a complete integration into the model of Technoprobe. A significant part of its business will be addressed to serve the current Technoprobe card manufacturing. It will be pretty difficult and not completely clear which will be the contribution moving forward in 2025. Overall, just to give you a broad sense of the measure, in 2025, DIS, if we consider standalone, can make a profitability in the region of 10%, something like that. Most of that will be transferred to Technoprobe profitability.
It will be borderline to define a separate division. We are considering ourselves as a unique cash-generating unit.
Thank you very much.
Thank you. Our next question now comes from Gianmarco Bonacina. Please, Gianmarco, the floor to you.
Yes, good afternoon. Two questions for me. First one, business-wise, can you give us an update on the qualification process for HBM? Is this something you are aiming for this year or next year? Also on final testing, my understanding was that you bought DIS to have some products for, let's say, entering this new market. How is going the work to prepare a new product for, let's say, advanced testing for ICs? A question on provision and D&A. I see that you had EUR 69 million of D&A and provision for the full year. I understood you said you had EUR 7.5 million provision in Q4. It's not clear for the full year. Just to understand, what is the recurring underlying D&A stripping out all the provision for the full year?
Sorry, the last one is about the margin, given that you will have some benefit from the restructuring of Harbor and DIS in the rest of the year. Can we consider the 30% EBITDA margin you should have in Q1 as a floor for the year? Thank you.
Okay. We'll start with your first question about HBM. Yes, I confirm we are running some qualification with main HBM players. The expectation is to finish the qualification by the end of the year. If positive, we can expect to start some business in 2026. About final test, this is already in progress. Actually, DIS is already introducing final test business to main customers. This is already happening as part of DIS business.
Okay. Moving to the provision questions. D&A is correct, what you say. For the most part, you have to strip it out from D&A in general overall, approximately EUR 12 million. EUR 6 million are above the gross profit, and EUR 6 million are below the gross profit. Total provision for impairment of fixed asset was equal to EUR 12 million, including both Harbor Electronics and Microfabrica provision. When I mentioned EUR 7.5 million before, it includes the EUR 6 million above the gross profit +EUR 1.5 million for the severance related to employees and inventory and other provision. Strictly related to D&A, we talk about EUR 6 million above gross profit and EUR 6 million below gross profit. The last part of your question was the profitability.
The margin, 30%, is expected to be actually the floor for the year, depending on, of course, the trend of the FX rate, depending on the volumes, depending on extraordinary provision if it happens. Let's say if the business will be as a recurring business, we do not expect less than 30% with the path we are now going.
Thank you.
Thank you for this question. We now have a question from Fabio Pavan. Please, Fabio, the floor to you. Fabio, I can see that you're on mute. Kindly unmute your line in order to ask your question. Thank you. I see that Fabio is having some problems. We will move on to the next question, which comes from Domenico Ghilotti. Please, Domenico, go ahead. Domenico, please kindly unmute your line.
Can you hear me now? Okay. The first question is on if you can provide some more color on the agreement with Advantest, the opportunity there and the strategic implications. The second question is on the MLO, you are trying to produce internally. The MLO, I am trying to understand how much do you think you can already manage with the new plant that you are starting up in Taiwan in terms of internal MLO production. If you see any implication on your business from the deal executed on FICT that, if I am not wrong, is a supplier of MLO?
For starting from Advantest, for us was a strategic deal to assure the PCB supply chain. As Advantest has a much stronger, bigger factory in the U.S. and Taiwan. For us, it was not making sense to keep a small company factory like Harbor in the U.S. With this deal, we can say that we are going to be sure to secure the supply chain for this very important component of the probe card and the final test board. Coming to your second question about MLO, we can already, it's not something we are trying to do, but it's already happening. Right now, we are about taking, let's say, we can produce 50% of our need is produced by our factory, and 50% is outsourced.
The reason of the extra investment on the MLO line was also to have the possibility to go to 100% if needed. This is why we are not worried about this because we are going to have enough capacity for all our need. At this moment, there is anyway no sign that the current supplier will stop supplying everybody. On our side, we feel that we will not have any problem because we will have enough capacity in Taiwan.
Are you satisfied with the quality of the product coming from the internal production, or do you need to ramp up the?
No, the product actually we develop in-house has even better performance than. This was, again, coming back to our D&A as a company, to develop technologies. We develop technologies that are not available. That was the case. The MLO done with a very complex technology was not available three or four years ago. That is why we decided to invest in that technology, to have a technology that could follow the future roadmap. At this moment, we can say that our MLO is the most advanced MLO in the market. We can follow really the roadmap for following many years ahead of us. Of course, we cannot know, we do not know if the other technologies available in the market will be able to do that.
We are very confident in our technology because it's based on wafer technologies, so semiconductor technologies, so very advanced.
Thank you.
Thank you for these questions. We're going to try to give the word back to Fabio Pavan. Please, Fabio, remember to unmute your line in order to ask the question. Thank you.
Yes, I'm here. Can you hear me now?
Yes.
Oh, finally. A few quick follow-ups. The first one is we're looking at 2025 Q1 guidance. Would it be fair to assume that data center and AI business would finally end up representing more than 40% of top line? Second question is, again, on AI, can you give us some more color of what's going on in terms of demand for customers, if there are new customers, if the demand is coming from same customers? Finally, a follow-up on the tariffs. If I got it properly, you were saying that you can neutralize a big portion of the potential impact in terms of duties. Just wanted to double-check if 15% of the revenues is the number we may expect to be affected by these duties. Thank you.
Let me start from the bottom. I did not say we can neutralize the impact of duties. The percentage is more or less what you said. Between 15%-20% of the deliveries are addressed to the U.S. market. They, in case, will be subject to duties. In that case, if there will be any custom duties associated to our products, we will discuss with the customers which is the best way to mitigate and to reduce the impact. So sooner or later, someone should decide who can absorb the cost of this or part of this or none. Depending on which would be the agreement with them, we can then mitigate the impact just in case. For the moment, there are no particular triggers.
Back to the first question about the split for the AI, we can see an overall addressable market for AI in 2025 that is equal between 35% and 40% for the full year. Given the split by single quarter, it's very, very difficult also because there is always the cut-off date. We can have an order in Q1, but the delivery in the second quarter related to AI. It is very tricky to give a day-by-day allocation by market. Overall, we expect to grow the AI market, as said, in the region of 35%-40% for the full year. I missed the second question. Sorry, can you repeat that? What was the?
No, I guess it was still referring on some potential more color on your AI services, but partially you already have answered this question.
I can maybe add that, of course, as you know, there are two main players for cloud AI. For those, we develop some specific technologies we feel very strong. There are some other opportunities that are coming from hyperscalers. We are talking about custom ASICs devices. In that case, for sure, we are in the position that we can leverage on our technologies. Even though these products are less complex than the main chips, they're still pretty complex devices. They can leverage from our technologies to get better performance. This is an opportunity that actually is not depending on us, but depending on how the market of the hyperscalers will develop in this segment. For sure, we see a good opportunity in that area.
Super. Thank you very much.
Thank you, Fabio. We now have that question from Luca Bacoccoli. Please, Luca, the floor to you.
Hello. Can you hear me?
Yes. Ciao, Luca.
Ciao. Good afternoon, everyone. A question and a clarification. The question regards the margin evolution in the coming quarters. If I got it right, you basically completed the restructuring in the U.S. for Harbor Electronics is concerned. I was wondering what margin should we expect in terms of improvement thanks to this restructuring activity. The clarification is on the first quarter guidance margin, which are improving significantly despite the restructuring was not completely yet over. I was wondering what is driving the strong margin increase, I would say, which are almost basically flat sequentially. Thank you.
Starting from the revenue lines, the top line increased more or less 7% compared to the prior quarter. We talk about Q4 respect to Q3. This 7% was affected a bit by the single quarter benefit from FX. That brought increase in the profitability as well for the full year. You see the sequential increase already arrived to 25%. This is the best quarter, more or less, best quarter of the year. We expect + 5%, 5 points more in Q1 2025, so arriving to 30%. The organization effect in Q1 will be still limited, as mentioned, because the two fabs, Microfabrica and Harbor Electronics, are still operating in the quarter. There is a partial effect in Q1 because most of the provision has been recognized in 2024.
We expect a further benefit in the second part of the year, so second half to Q3 and Q4. Where we can arrive, that really depends on the complete integration of DIS. There is still a way to go to be fully integrated in terms of processes and efficiency. Also, let's not forget that new fab, for which we invested more than EUR 100 million in the last couple of years, is still running not at full capacity. We expect fiscal year 2025 to run between 25%-30% of the capacity. That brings a bit of additional cost and inefficiency too. We will not be able to reach the full efficiency in 2025. We are currently not really able to define if the full efficiency will be gained in Q3, Q4, or Q1 2026.
That is why we are very, very careful when we want to project our profits. For sure, that will be increased compared to 2024. This is a very, very good and important signal for our business.
Okay. Thank you. Just another follow-up on profitability. You were mentioning that pricing on artificial intelligence is higher than the rest of the business. Does this translate also in better margin? Thank you.
This is slightly better because that's correct. There will be higher revenues, but you have to remind that there will be higher costs, especially R&Ds, especially cost of products. Profitability will increase a bit, but not that much to have a significant amount, a visible amount on the overall profitability of the company. We always say that the best driver for the profit, profitability, is volume. When the volume goes up, the profitability of the company is more than proportional.
Okay. Great. Thank you.
Thank you, Luca, for your question. Our next question now comes from Alberto Nigro. Please, Alberto, go ahead.
Yes. One last curiosity from my side because Teradyne, during his last analyst day, spoke about a joint development project with you to launch a new product on the market this year, then with more material financial impact on 2026. Can you provide any additional color on that? Thank you.
Yeah. Basically, there are several projects and several applications that we are working together with them. The reason is very simple, because, as you know, the probe card is interfacing with the tester. The tester is the one where the test program is loaded, and through the probe card, it is reaching the silicon under test. It is very clear that the two things are not separate things. The tester technology should evolve based on the probe card technology and also the opposite. The probe card technology is evolving based on tester technology. There are many things that should develop together in order to have, at the end, a better test coverage. This is basically the reason for several joint development projects.
Thank you very much.
Thank you. As there are no further questions, I will now give the word back to the speakers for any final comments before bringing this presentation to a close. Thank you.
I'd like to thank you, everyone. We will be waiting for you for the Capital Markets Day on April 14, 2025.